AMD Reports Q3 2020 Earnings: Making Money and Setting Records Yet Again
by Ryan Smith on October 27, 2020 1:15 PM EST- Posted in
- CPUs
- AMD
- GPUs
- Financial Results
As part of this morning’s announcement from AMD that the company would be buying FPGA maker Xilinx for $35 billion in stock, the company also released its Q3 earnings report alongside the buyout news. An atypical earnings release to say the least, an early-morning release allowed AMD investors and others to get a look at the very latest in AMD’s financials while also digesting the decision to use the company’s sizable market capitalization to buy another company – and ultimately to help AMD justify why they’re in such a good position now to make the transaction. Coming on the heels of a record Q2 for the company, AMD closed out the third quarter of the year setting revenue records once again all the while trebling its profits.
For the third quarter of 2020, AMD reported $2.8B in revenue, a 56% jump over the same quarter a year ago. As a result, AMD has once again set new revenue records for the company, posting both their best Q3 ever, and their best single quarter period. Driving this was further growth in both of AMD’s major segments, with everything from consumer CPU sales to EPYC and semi-custom sales reported as being on the rise.
| AMD Q3 2020 Financial Results (GAAP) | |||||
| Q3'2020 | Q3'2019 | Q2'2020 | |||
| Revenue | $2.8B | $1.8B | $1.93B | ||
| Gross Margin | 44% | 43% | 44% | ||
| Operating Income | $449M | $186M | $173M | ||
| Net Income | $390M | $120M | $157M | ||
| Earnings Per Share | $0.32 | $0.11 | $0.13 | ||
Most eye-popping, perhaps, has been AMD’s net income, which more than trebled over the year-ago quarter. For Q3’20, AMD booked $390M in GAAP net income, a 225% increase that dwarfs the $120M they took home at this point last year. Even on a quarterly basis AMD’s revenues and profits were up significantly across the board, with AMD again more than doubling its net income versus Q2. In fact the only aspect of AMD’s financials not showing significant growth at the moment is AMD’s gross margin, which at 44% is only up 1% over last year. According to the company, GM growth is being limited by relatively low margin semi-custom sales, with the PS5/XSX ramp-up counterbalancing the increase in CPU sales.
Breaking down the numbers by segment, AMD’s Computing and Graphics segment enjoyed a strong quarter based in large part on an increase in Ryzen processor sales. Overall the segment booked $1.67B in revenue, which is up 31% over the year-ago quarter. Carrying the segment were sizable increases in both AMD’s desktop and notebook CPU shipments, with AMD reporting double-digit growth in both and setting a new record for notebook processor shipments. AMD’s graphics division was the odd man out, however; the run-up to the RX 6000 series means that graphics revenue was down versus Q3’19.
| AMD Q3 2020 Computing and Graphics | |||||
| Q3'2020 | Q3'2019 | Q2'2020 | |||
| Revenue | $1667M | $1276M | $1367M | ||
| Operating Income | $384M | $179M | $200M | ||
As for product average selling prices (ASPs), AMD is reporting that both client processor and graphics ASPs have taken a hit on a yearly basis. Graphics ASPs were down due to AMD’s current-generation RX 5000 products approaching the end of their lifecycle, while CPU ASPs declined due to higher sales of mobile chips, which tend to carry lower prices. Both of these should change for AMD in the next quarter, as the launch of Zen 3 and the Radeon RX 6000 series will put a fresh round of products on the market that can fetch higher prices.
Meanwhile, AMD’s Enterprise, Embedded, and Semi-Custom segment saw another greater quarter with Q3, with shipments of everything from EPYC processors to console SoCs on the rise. With the former, AMD has continued to grow its market share in the server space, and on the company’s earnings call CEO Dr. Lisa Su confirmed that server sales have more than doubled over Q3’19, citing improved cloud and enterprise adoption. Meanwhile the ramp-up for the Playstation 5 and Xbox Series X has pushed semi-custom sales higher as well, and that’s expected to grow even more in Q4.
| AMD Q3 2020 Enterprise, Embedded and Semi-Custom | |||||
| Q3'2020 | Q3'2019 | Q2'2020 | |||
| Revenue | $1134M | $525M | $565M | ||
| Operating Income | $141M | $61M | $33M | ||
And, like the consumer side of AMD’s business, the enterprise side is about to benefit as well from the launch of next-generation products. AMD has confirmed that their Zen 3 architecture-based EPYC “Milan” processors will begin shipping this quarter as previously promised, with the initial chips going out to cloud and “select HPC” customers. Meanwhile general OEM availability will follow in the first quarter of 2021.
Overall, AMD has a lot to be happy about for Q3, and even more to look forward to in Q4. With AMD posting record revenue and their traditionally strongest quarter still to come, the company is expecting an even better Q4. The combination of Zen 3 CPUs for desktops and servers, along with new Radeon hardware will mean that AMD has momentum and new products on their side. All of which comes at a critical time for the industry, as AMD seeks to use its technology advantages to carve a larger piece of the x86 processor market from an uncharacteristically dazed Intel.
Source: AMD
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duploxxx - Wednesday, October 28, 2020 - link
do you actually know what volume ramp means?Ice Lake will be available for OEM delivery May 2021 at the earliest and everybody knows its not a ground braking difference as a next generation Xeon, in fact many OEM advice most buyers just to continue with Cascade R till next release of Intel Xeon 2022. Yes the whole R series will be available till 2022 and this is for a reason....
AMD will have availability for OEM March at the latest.
The only issue is that the share amount of devices (e.g. different types in lineup) is so limited because of the pay OEM R&D for designs is the new concept. In the past Intel screwed market share because of there volume deals (and were feed for that) the last few years they are doing it again by just funding OEM R&D for design wins... they just throw there money at it to get the most Device SKU.
conclusion: second time that the customer/consumer is screwed when buying from large system suppliers because of Intels criminal behavior. (but on the other hand AMD would not be able to fullfill the supply chain)
Spunjji - Wednesday, October 28, 2020 - link
The fact that you had to quote so selectively - ignoring the desktop comments to focus purely on server, and ignoring the context behind the two quotes (i.e. whose estimates have actually been reliable recently) says it all really.You can keep ranting that it's unfair all you want, but it's the truth.
JayNor - Wednesday, October 28, 2020 - link
"...and their consumer desktop parts still being stuck on 14nm"and AMD took a year to respond to Intel's Ice Lake consumer laptop part processing.
and AMD still is stuck without responding to Intel's laptop introduction of thunderbolt, wifi6, avx512, dlboost.
Intel has pushed ahead again, introducing pcie4, thunderbolt 4, av1 decoding, 8k60 display, xe integrated graphics. Is AMD dazed?
The truth is that Intel builds on the order of 10x more chips than AMD and has ramped up laptop products first as it ramped up its 10nm yields and fabs. Now they are beginning to move on to Ice Lake Server and Alder Lake desktop 10nm designs, as well as 10nm FPGAs, P5900 familty parts, Lakefield and discrete Xe GPUs.
Yes, they will still build a 14nm Rocket Lake successor to Comet Lake, but you imply this is some sort of failure, while ignoring its new Willow Cove core, PCIE4 io, higher speed memory support and their 14nm history of superior clock rates. The truth is it can make good use of Intel's 14nm fab space to build what should be a killer high performance part.
anactoraaron - Wednesday, October 28, 2020 - link
It really is obvious to find the fanboys in the comments. Fine...AVX512 is a niche (tell me who again uses this?), thunderbolt is proprietary, and amd doesn't make wifi chips.
"Intel has pushed ahead again, introducing pcie4, thunderbolt 4, av1 decoding, 8k60 display, xe integrated graphics."
PCIe 4.0 was first on x570 on AMD. Thunderbolt 4 is a rebranded thunderbolt 3 with no speed increase, av1 is supported by AMD, "8k60 display"... idk what you're on about here Intel doesn't make displays, xe graphics is in response to their iris graphics being uncompetitive with low end nvidia and AMD integraded offerings and is just a name rebrand as there won't be iris anymore...
Spunjji - Wednesday, October 28, 2020 - link
Why do you think those figures have any relationship to the quote? Intel can make billions in their sleep, they're proving that right now. Doesn't change the fact that their response to a resurgent AMD has been lackluster and halting since 2017.Machinus - Tuesday, October 27, 2020 - link
Does bassing your income mean four times as much?BedfordTim - Wednesday, October 28, 2020 - link
That sounds fishy to me.TheJian - Wednesday, October 28, 2020 - link
https://www.macrotrends.net/stocks/charts/AMD/amd/...Dec 2009 1.646B revenue.
https://www.macrotrends.net/stocks/charts/AMD/amd/...
Dec 2009 1B+ net income Q. 20% net margin back then too 1/2 that today (7.96% last Q). GM was 52/49 back to back Q's.
https://www.macrotrends.net/stocks/charts/AMD/amd/...
Shares outstanding have tripled since 2006, doubled since 2009 Q I mentioned. So essentially your share today is worth 1/2 whatever it was 2009ish if all things were equal.
Looking at assets/debt basically both numbers half 2008 data. So not much diff there. From 2008-2016 it was basically a $2-10 stock (never over it). 2009-2011 they made 304m/471m/491m net income respectively with that 1B Dec Q4 in there. They might crack 1B this year finally for a full YEAR. But that's still only double previous years while 2x shares out there. So if it was never worth over $10 and you dilute it 1/2, it's $5 then. Double your income makes you $10ish today? Given that most of the other crap is essentially the same or worse vs. back then. I can't make $80 out of this stock any way I slice it, though I will admit it's far better than days ago. Net income up to almost 400mil for the Q, but miles from ~1.5B the stock price says. Raise prices AMD and quit making console crap for $100 that makes you $10-15 tops. Those teams should be working HIGH MARGIN products only. IE, Intel selling NAND biz. Because on ~2.8B revenue they had a OP income of ~600mil TTM IIRC (going up now that they're selling but not enough, and lost money for 2018/2019 NET). So Intel sees AMD console margins and SELLS that part of the company. NV saw those margins and passed as it robs from CORE R&D (yep, look at 3090, last 5yrs etc NV making 4B NET now). AMD chose to chase poor margins, small gpus, and got small income. NV/INTC chose to constantly chase rich (founders edit, HEDT, servers for both, workstations etc), and both made BILLIONS yearly.
Someone explain ~$80ish when shares are diluted 2x and income isn't ~8-10x 2009 when it was $2-9 (and most of that way below 9's in the 2-6 range most of time)? They are going the right way, but should have made the income already for 3yrs but instead acting like a king with price war powers (no, you're the little guy, big guy can bleed for YEARS, BILLIONS). All kinds of things about to help Intel by next xmas (2021, Q1 new chips, Q2 new one, Q4 new one, Q1/21 gpus etc). You have wasted 3/4 of your party. I really hope they start hitting 1B+ NET INCOME Q's from here forward or at some point people will look at this math vs. p/b, p/e, p/s, shares, etc, etc.
Packaging will become very important shortly and Intel is way ahead there over TSMC (by a year or more). At some point Intel will start the price war so you can't earn 1B Q's. I don't see how you get around them buying TSMC wafers (limits your supply, already multi Billion deal done) until their fabs are back on top or even. Backporting already works well at Intel as proven, and more next year. They have a ton of options to limit AMD and worst case you just break the laws again since they made 60B NET INCOME over a decade they screwed AMD and paid 1.5B settlement for doing it. Do it again...LOL. Same story with MSFT, don't expect them to play by the rules either (2.1B fine for more than Intel income IIRC). Even if it was 30-40B fine on that 60B, you still win, they didn't grow while you cheated. Considering the country NEEDS Intel for military (fabs and tech), expect more govt deals next 4yrs.
Start making NET INCOME AMD. Revenue isn't the same as the bottom line. Grow the bottom too! Taking share just pisses off the much more powerful NV/Intel (that should be done slowly at first while banking R&D income!). It's only worth doing that if you are making MONEY on that share. Both are now responding in many ways. Intel speeding up chip releases (killing them faster now) and using other fabs, ahead in packaging vs. TSMC etc and just won a contract with US govt for it. So your tax dollars are about to help Intel to keep TECH inside USA vs. everyone else :)
https://www.intc.com/news-events/press-releases/de...
Not good for TSMC, AMD, NV etc right?
https://www.intc.com/news-events/press-releases/de...
Two Oct announcements with Govts: India is a great place to partner if you can't go China now with 1.4B people there that don't hate us and like business (trying to develop everything, good move by Intel to get this). Trump will be defending the country, and helping my stocks :) Biden will sell out to china; I hope people get this. Micron will be gaining from govt soon too as you can't count on HK/SK/Taiwan etc, might all be china soon right? Trump knows he needs, fabs, cpu/gpu, mem, tools, etc ALL in USA to stay ahead in tech for military (listen to his speeches). Intel is selling a chunk of the 11% of their plants etc in China in that nand deal for 9B. Good move. Sell the losing china crap and stock swap merge with micron soon? FTC won't blink with trump in. MU had 14B net income not long ago and will go back for DDR5 ramp etc. Cycle is coming. Good luck all, even the haters. Anything to get dems off welfare...LOL.
If anyone has data that can say why your stock is worth $76-80 bring it. Data means numbers in this case. It's like people have forgotten how to value a stock now. I could give tons of other metrics, check all the other tabs at macrotrends. $76? pfft. 36B for Xilinx? pfft. Remember ATI (5.4B for a company that never made more than 65mil/yr)? Not quite as bad here, but...Whatever. Time to read stock reports...LOL. Again, hope you all make money.
TesseractOrion - Wednesday, October 28, 2020 - link
The Jian: TL: N(ever)Rjospoortvliet - Saturday, October 31, 2020 - link
Try to cut your text in half while not saying less and use headers, it would make it an easier read. Now it is just a huge ramble, messy and hard to track.My main comment besides that is that your stock price analysis, while correct, is missing the fact that the entire market is overvalued due to 'quantitative easing throwing too much money at the rich, money that goes in housing and the stock market without ever hitting the real economy. As money does it causes inflation of prices - stocks rising unreasonably - until it bursts. Be careful investing in stock now, it WILL crash. The stock market is worth 10x the entire economy, with our economic growth numbers that makes no sense... if a stockmarket reflects expectations when will our economy grow that 10x? Yeah, not soon...